AUD bulls hit by poor Capex, light trading expected in Europe

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 26, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Mumbai) - The AUD bulls entered thin markets today in Asia and gave up its resilience after the dismal capex data fuelled bets for further RBA easing. The Kiwi continued its upbeat momentum and hovered near 0.66 handle while the yen jumped back on the bids as USD bulls took a breather.

    Key headlines in Asia

    Metals stage solid recovery, Copper jumps +3%

    Australia's capex: Major headline miss, 4th estimate 15/16 at A$120bln

    Australia's CAPEX: The plot thickens for the RBA

    Dominating themes in Asia - centered on JPY, AUD, NZD

    The greenback continued to trade in a similar pattern in Asia as seen since Tuesday, consolidating into the Thanksgiving holidays after an extensive rally in the previous session. The US dollar rose to the fresh seven-month highs against its major peers after the Dec rate hike option was further confirmed on upbeat US macro data. The US dollar index rose sharply to 100.21 on Wednesday, strongest since April and now recedes to 99.78, down -0.05% on the day. The US durable goods orders advanced 3% in October, beating the forecasts of a 1.6% rise. While initial jobless claims fell to 260,000 in the week of November 21, below the 270,000 mark the markets had been expecting. While the Core PCE index rose to 1.3%, matching estimates.

    Meanwhile, amid broad based USD retreat, the USD/JPY pair continues to suffer as lack of fresh fundamental triggers also fails to provide further momentum on the major. The dollar-yen pair now await Japan’s inflation figures due tomorrow for fresh incentives as trading is expected to light in wake of the US Thanksgiving holidays.

    The Antipodeans traded mixed amid persisting risk-on trades and recovery in the base metals complex. However, the Aussie failed to benefit from the rebound in copper and gold prices as a horribly weak Australian capex print overshadowed the recent strong jobs report and may call for further easing by the RBA next month. Private capex spending slumped 9.2% in Q3, missing the forecast 2.8% decline big time. While the 2015-16 capex estimate, came in line with forecasts at $120 billion for the fourth estimate.

    The NZD/USD pair trades higher and emerges the best performer in Asia as the latest upbeat NZ trade balance continue to underpin. The trade gap narrowed from a revised $1.14 billion in September to $963 million last month. However, plunging NZ exports led by 29% decline in milk powder remains a concern for the bird. The Kiwi trades 0.18% higher at 0.6590.

    The Asian stocks snap previous losses and rebound, with Japan’s benchmark, the Nikkei now 0.59% to 19,964. While mainland China’s benchmark, the Shanghai Composite gains 0.25% to 3,657 points. Australia’s S&P ASX index rises 0.39% to 5,213. Hong Kong’s Hang Seng rallies over 1% to 22,752.

    Heading into Europe & the US

    Absolutely a data –dry EUR and US calendar today as the US markets enter the US Thanksgiving holiday, which is likely to dampen trading volumes for the remainder of the week. And hence, no major macro data is on the cards except for the 2nd tier data from the Eurozone - money supply and the German Gfk consumer climate. Besides, Bank of Italy Governor Ignazio Visco will speak at a conference in Bologna.

    EUR/USD Technicals

    Valeria Bednarik, Chief Analyst at FXStreet noted, “In the 1 hour chart, the pair trades below its moving averages, with the 20 SMA attracting sellers around 1.0630 the immediate resistance. In the same chart, the technical indicators have recovered from oversold readings, but remain well below their mid-lines and lacking upward strength. In the 4 hours chart the price is also unable to advance above a mild bearish 20 SMA, whilst the Momentum indicator continues to lack directional strength around its 100 level and the RSI indicator hovers around 44, limiting chances of further recoveries. Support levels: 1.0590 1.0550 1.0520. Resistance levels: 1.0630 1.0660 1.0695.”
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